I ran into an interesting blog post over at indie iPhone dev Veiled Games’ site discussing the commercial fate of the firm’s classy microgame Up There. We liked Up There a good deal, and it seems like the Powers That Be did too, because Apple gave it a featured spot on the US App Store in late January. The app enjoyed its brief period in the sun–taking in excellent revenues at $1.99, and then shifting into overdrive at a sale price of 99 cents. Then it fell back down to Earth, as all balloons are likely to do sooner or later.

Evan of Veiled Games writes that even the tender ministrations of the App Store programmers weren’t enough to push Up There onto the Top Paid Apps list for long. “Don’t count on a feature to turn your app into something it isn’t,” quoth Evan. “Up There was a niche app, for people who want a nice little relaxing casual game, with pretty music and a balloon for a protagonist. Not the kind of thing to rock the App Store world. A feature couldn’t change that, and Up There has since pretty solidly moved to where it would have been if the feature had never happened.”

After this experience, Veiled reached the conclusion that small games like Up There simply get lost in the daily fire hose of new apps. “It’s our humble opinion that the days of the tiny apps are done… you’re in a better spot if you make something really remarkable’¦ an app that feels like a real game, not a distraction.” Accordingly, Veiled is putting a lot more development juice into its next project, which sounds like it will have a much greater scope than Up There.

It seems like a logical response, but is it correct? Have commercial conditions on the App Store evolved to a point where it makes sense for a developer to move away from microgames, in favor of more ambitious concepts? It’s certainly a worthy goal. I’m sure that we would all like to see iPhone games that have the complexity, depth, and production values to rival games on the portable consoles. I’ve advocated for it repeatedly since I started STP.

All of that said, if I were running a publisher instead of a website right now, I’d still be concentrating my resources on 99 cent-$1.99 microgames. As much as I hate to admit it, that’s firmly where the center of the market is at the moment, and it’s likely to remain there for some time, barring significant structural moves from Apple. For now, the main use case for the majority of people who buy iPhone and iTouch games is the one-to-five minute “gameplay snack.” Most of these customers aren’t “iPhone gamers”–they’re idling away time. They want novelties and amusements, not gameplay, and they’re drawn to provocative concepts and gimmicks.

I don’t mean this in a pejorative sense; I am simply describing reality. In fact, I mostly prefer microgames myself these days. Working stiffs like me don’t have the patience or energy to learn something that’s designed to stress, rather than relax. Lots of others seem to agree, by the looks of the top paid games list. Flight Control, Flick Fishing, Doodle Jump: these are all high-quality microgames that have resonated with consumers. They cost essentially nothing, and they’re highly replayable. Those many, many App Store customers that are reluctant to pay for anything can be coaxed into spending a buck.

And then, of course, there’s the all-important profits side of the equation. Microgames are a low-risk, low-reward play. They cost only a fraction of a full game’s development budget. Is any individual microgame likely to hit it big? Definitely not–you’re playing the lottery, like Evan notes in his blog post. But if you put enough of these small games out and keep them on the App Store, updating them fairly regularly, a long tail effect should start to come into play. With enough games, that can add up to substantial revenue on the margins. Think about it like choosing a boring passive ability when upgrading your character in an RPG (classic example: percentage bonus to experience) instead of a flashy mega attack. A small but steady push is going to do a lot more good over the lifetime of the character.

Now examine the next tier of titles on the top paid games list: Bejeweled 2, Fast & Furious The Game, 2XL Supercross, Tetris, Galaga. The publishers of these games are living the dream–they get to charge more than 99 cents for their games, while still chilling out in the Top 20, where real volume gets done. Brands and marketing make the difference for most of these larger games. The publishers are still dealing with the volume problem, but the fact remains that they’re playing on a different field than the no-name apps, no matter how good those might be. A familiar name is a boon. Plus, there is some evidence that a Veblen Effect is starting to kick in, at least for self-identified “console” games like Supercross. For certain buyers, higher prices combined with the right name will signal a different quality of experience.

I’m finding it difficult to wrap this article up, because as I read over what I just wrote, I realize that I’m recapitulating the same basic logic that has been ghettoizing the App Store. But that is how the business has evolved. Apple sets the terms, customers buy, and the results are self-evident. We want better, more expensive games, but not enough people are willing to pay for them to make them profitable. It sucks.

I see two basic ways forward. First, Apple delivers structural changes from on high–things that reset how people spend on iPhone games, like a Premium Games section and micropayments. Second, a middle ground bridging micro- and macrogames emerges from below–developers slowly improve the overall quality level of iPhone games while consumers come to accept paying more, little by little. I think we’re going to need to see both at work for the business to continue to grow like it has. That iPhone OS 3.0 release can’t come fast enough.

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